Bell Brothers Has $3,000,000 in Sales

question 37

Multiple Choice

Bell Brothers has $3,000,000 in sales. Fixed costs are estimated to be $100,000 and variable costs are equal to 50% of sales. The company has $1,000,000 in debt outstanding at a before-tax cost of 10%. If Bell Brothers' sales were to increase by 20%, how much of a percentage increase would you expect in the company's net income?

• A) 20.83%
• B) 19.79%
• C) 21.92%
• D) 23.08%
• E) 18.80%

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Definitions:

WBC

WBC stands for white blood cells, which are part of the immune system and help the body fight infection and other diseases.

Sprain

An injury to a ligament caused by overstretching or tearing.

Inflammatory Response

The body's defense mechanism against infection, injury, or disease, resulting in redness, heat, swelling, and pain.

Ice

The solid form of water used to cool beverages, reduce swelling, or preserve food, among other applications.